Compounding – The Eighth Wonder Of The World

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 Compounding – The Eighth Wonder Of The World

"Compounding Is The Eighth Wonder Of The World."-Albert Einstein

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The magic of Compounding is one of the most beautiful thing one can ever see. It shows that in the long run one- or two-day struggles are insignificant what actually matters is small steps compounded over a long period of time. For a person who has never witnessed the beauty of compounding, this line may seem stupid but once you realize that how compounding governs your life everything starts making sense. So, to show you the power of compounding let me give you an example:

What would you choose 10 crore rupees or 1 rupee that doubles itself every day for 31 days?

Now most of us will choose 10 crore rupees at once and it makes sense that what difference would 1 rupee make until you do the math.

Day 1: 1

Day 10: 512 rupees (very small amount)

Day 15: 16,384 rupees (looks like an ant in front of elephant)

Day 20:  5,24,488 rupees (now you may feel that only an idiot will make such a choice)

Day 25: 1,67,77,216 (well still small in front of 10 crores)

Day 31: 1,07,37,41,824 rupees (Now you wish that you made this choice)

 

An amount as small as 1 rupee after being compounded becomes 10 times more than 10 crores. This is the power of compounding. In life we take decisions or are into habits that we think are small and won’t affect our life but they actually do. And the best thing about compounding is also the worst thing about it, it applies to all aspect. Which means that one more episode of a web series each day is affecting you. One more ice cream also has a worse effect on your health. Your conception that one day no reading or  junk food for 2 days will not affect your life is  wrong because if that one rupee is not compounded for four meaningless days, it remains only 6 crores.

We all take a new year resolution every year and must have worked hard for at most a week but that week is not enough, what you need is a habit. 1 day of reading books won’t make you Einstein, one day at the gym will not make you Arnold, one day in the stock market will not make you Warren Buffet. The equation of success is very simple and this misunderstood, So, I want you to always remember this equation.

Small & Smart Choices + Consistency + Time = Radical Differences.

Now all the stuff that I told you explains the phenomenal power compounding holds but does not tell us how to implement this power in real life. So, Let’s take a look on that through an example: Suppose, You and your friend are of the exact same shape and size. You are at the same position and have the same salary. You decide that from now on you will read 10 pages of a new book everyday and walk 1000 steps more each day while your friend decides he can enjoy 1 hour more TV and maybe a can of soft drink each day. He or she just wants to enjoy life a bit. If someone compares both of you after 10 months you will be exact same. Yes, no difference but you don’t stop and continue those habits. After 18 months you notice changes. You are trim while your friend is fat. You got a promotion because of the knowledge from those books you read while your friend is where he was though he is a bit jealous. This is what compounding looks in real life. The path to success is too simple that we ignore or miss it and the main reason behind this is our perception that only complicated things are true while everything else is meaningless.  But if you have read till here, you are probably thinking “Man! How did I miss this?” Well now you know and it is crucial to start as possible so that you can reap the benefits. Remember TIME is one of the most important part of the equation.

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